Introduction to Vishal Mega Mart IPO

Vishal Mega Mart, a prominent supermarket chain in India, is gearing up to launch its initial public offering (IPO) on December 11. The company aims to raise Rs 8,000 crore through an offer for sale (OFS). The public subscription period will run from December 11 to December 13, with share allotment scheduled for December 16. Trading of shares is set to commence on December 18 at both the BSE and NSE exchanges.

Grey Market Premium (GMP) Insights

The company's shares are currently exhibiting a grey market premium of approximately 31%, with the current GMP standing at Rs 24, according to an ET report. This robust performance in the grey market signifies significant investor interest, suggesting a potential listing premium of about 31%. Notably, the GMP has grown from Rs 17 observed during the weekend, indicating increasing investor confidence.

Price Band and Investment Details

Vishal Mega Mart has set a price band of Rs 74-78 per equity share for its IPO. The Rs 8,000 crore book-built issue comprises solely an offer for sale (OFS) of 102.56 crore shares. Retail investors can apply for a minimum of 190 shares, requiring an initial investment of Rs 14,820. For small non-institutional investors, the entry requirement stands at 14 lots (2,660 shares), necessitating Rs 2.07 lakh. Large non-institutional investors must invest in at least 68 lots (12,920 shares), requiring Rs 10.07 lakh.

Should You Subscribe to the IPO?

At a projected market capitalization of approximately Rs 35,168 crore, the company's IPO is valued at 71 times its projected FY25 earnings. This valuation appears more modest compared to its primary retail competitors, with Avenue Supermarts (DMart) trading at a PE multiple of 92 and Trent commanding a higher multiple of 137. Considering Vishal Mega Mart's established market position, operational scale, and focus on serving its target demographic, the IPO presents an attractive investment prospect despite its aggressive pricing.

About Vishal Mega Mart

Established in 2001, Vishal Mega Mart operates as a fashion-focused hypermarket chain throughout India. The retailer provides home and kitchen appliances, travel items in its General Merchandise division, whilst its Food and Groceries section offers FMCG products and household essentials. A notable ownership transition occurred in 2018 when Partners Group of Switzerland and Kedaara Capital from India acquired controlling interest. The company's retail footprint, as of September 30, encompasses 645 franchise outlets across 414 cities, utilizing more than 11 million square feet of retail space.